Article Highlights

  • European HICP: 0.4% vs. 0.4% forecast/previous
  • European HICP Core: 0.8% vs. 0.8% forecast/previous
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Volatility was mostly tight in London session trade, but we did see sellers continue to control Sterling and buyers hop back into the comdolls amidst a light morning of news.

Major Events/Reports:

European Inflation inline with expectations and previous – Inflation continues to grind higher in Europe with today’s read showing a rise by 0.4% on the headline and 0.8% on the core reading, boosted by rising prices in rents and restaurants. The euro did get a slight bump higher on the release of the news, but it seems like the other majors continue to influence broad currency sentiment.  It will be interesting to see if President Draghi mentions the rise in inflation in his speech later today at 5:35 pm GMT.

U.K. cannot back out of Brexit – Sterling’s weakness is the main mover in the currency markets once again, this time likely on a combination of headlines including a legal challenge to triggering Brexit and a selloff in U.K. government bonds on Brexit fears. After a solid bounce in Asia trade, it’s been all down hill since the London session open with most Sterling pairs breaking Asia lows.

Risk appetite is off to start the week – it looks like fear across the board, including the equity markets:

  • The pan-European FTSEurofirst 300 was down by -0.51% to 1,335.25
  • The blue-chip Euro Stoxx 50 was down by -0.22% to 3,018.41
  • Germany’s DAX was down by -0.31% to 10,547.55
  • The U.K.’s FTSE 100 was down by -0.60% to 6971.31

The risk-off mood also dragged the U.S. futures markets:

  • S&P 500 futures were down by 0.12% to -2,130.42
  • Nasdaq 100 futures were down by 0.22% to -4,800.00

Oil is on the move  – A potential $13B deal between Russian and Indian oil firms could be the reason why we’re seeing  crude oil volatility pick up in ahead of the U.S. open:

  • U.S. crude oil was up by 0.16% to $50.43 per barrel
  • Brent blend crude oil was up by 0.15% to $52.10 per barrel

Major Market Movers:

GBP – The British pound continued to take it to the chin in morning London trade, with selling accelerating as we headed into the U.S. open:

GBP/USD was down by 28 pips (-0.23%) to 1.2152, GBP/JPY was down by 38 pips (-0.29%) to 126.51, GBP/CHF was down by 46 pips (-0.38%) to 1.2015

CAD – The Loonie is slightly up on the day, likely on oil’s tick higher:

USD/CAD was down by -12 pips (-0.09%) to 1.3125, EUR/CAD traded lower after making an Asia session high around 1.4480 to now trade at 1.4438 still up +0.22% on the day, CAD/JPY was down by 9 pips (-0.12%) to 79.18

EUR – The euro continues to hold onto its early week gains after the tick higher in inflation:

EUR/GBP was up by 54 pips (+0.6%) .9055, EUR/JPY was up 16 pips (+0.14%) to 114.42, and EUR/USD was up by 30 pips (+0.27%) to 1.1000

Watch Out For:

  • 12:30 pm GMT: U.S. Empire State Survey Index (1 expected, -1.99 previous)
  • 12:30 pm GMT: Canadian Foreign Securities Purchases (C$ 5.23B previous)
  • 13:15 pm GMT: U.S. Capacity Utilization (75.6% expected, 75.5% previous)
  • 13:15 pm GMT: U.S. Industrial Production m/m (0.2% expected, -0.4% previous)
  • 16:15 pm GMT: FOMC Member Stanley Fischer Speaks
  • 17:35 pm GMT: ECB President Mario Draghi Speaks
  • 22:45 pm GMT: New Zealand Consumer Price Index (0.1% expected, 0.4% previous)

See also:

Asian Session Forex Recap

Last Week’s Top Forex Movers

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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